When Are Preferences Consistent? The Effects of Task Familiarity and Contextual Cues on Revealed and Stated Preferences
AbstractTraditionally, economists make a sharp distinction between stated and revealed preferences, viewing the latter as more fully meeting the assumptions of economic analysis. Here, we consider one form of empirical evidence regarding this belief: the consistency of choices in stated and revealed preference tasks. We show that both kinds of task can produce consistent choices, suggesting that both can measure underlying preferences, if necessary conditions are met. We propose that a necessary condition is that task be either familiar to those facing it or offer contextual cues that substitute for familiarity, such as prices in competitive markets or recommendations from trusted, knowledgeable sources. We show that how well decision makers achieve such understanding is often confounded with the method that researchers use. Considering task familiarity not only clarifies some of the conflicting evidence regarding revealed and stated preference methods, but raises potentially productive questions regarding the roles of social institutions in shaping preferences.
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Bibliographic InfoPaper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 1007.
Length: 20 pages
Date of creation: Aug 2010
Date of revision:
Consistency; contingent valuation; framing; public goods; revealed preferences; stated preferences; validity;
Find related papers by JEL classification:
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-11 (All new papers)
- NEP-CBE-2010-09-11 (Cognitive & Behavioural Economics)
- NEP-DCM-2010-09-11 (Discrete Choice Models)
- NEP-UPT-2010-09-11 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Schlapfer, Felix & Schmitt, Marcel, 2007. "Anchors, endorsements, and preferences: A field experiment," Resource and Energy Economics, Elsevier, vol. 29(3), pages 229-243, September.
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